Mahindra closes in on Tata Motors as EV sales falter

Mahindra & Mahindra has surpassed Tata Motors as India’s third-largest carmaker thrice in the second half of 2024 on new launches at a time cooling electric vehicle sales and an ageing line-up have hurt the fortunes of the Tata Group company.

In August, September, and November, Mahindra, the maker of Thar sport utility vehicle (SUV), cornered 12.64%, 12.64%, and 13.14% share of the nation’s passenger vehicle market, respectively, showed a Mint analysis of the government's vehicle registration data compiled by Fada Research. That surpassed Tata’s 12.26%, 11.53%, and 13.10%, respectively, for those months.

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Tata Motors’ market share, driven by the Nexon EV, peaked at just over 14% in March but its performance has since deteriorated as India’s nascent electric vehicle market has been hit by a withdrawal or reduction in Central government subsidies. EVs account for just 2.5% of India’s annual passenger vehicle sales of about 4 million units.

Over reliance on EVs

A few carmakers’ troubles lie partly in its “over-reliance" on electric vehicles, which is still a nascent segment in India, Gaurav Vangaal, associate director at S&P Mobility, told Mint. The new EV lineup, once an advantage, is now facing setbacks with sales declining demand and increased competition, he said, adding that MG Motor India’s Windsor EV became the nation’s best-selling electric car soon after deliveries began in October, challenging the Tata’s early lead.

Mahindra has gained with the success of mainstay SUVs like the Thar Roxx, which has garnered over 1.7 lakh bookings. Attractive pricing of models like the XUV700 also helped it sustain volumes in its current line-up.

For Tata, the refreshed Nexon has failed to deliver with sales. Moreover, Tata’s Curvv EV—a coupe-style vehicle meant to expand its portfolio—has struggled to find buyers, competing in a similar price band as the Nexon EV and leaving potential customers divided.

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“Customers are not ready to adopt coupe-style EVs in significant numbers yet," Vangaal said. “But if Mahindra sees acceptance for such designs in its ground-up EVs, Tata’s Curvv ICE (intenal combustion engine) should gain traction and it will benefit from coupes popularity too."

Emailed queries to Tata Motors remained unanswered at the time of going of press.

Nalinikanth Gollagunta, chief executive, automotive division, Mahindra, cited new launches and a clear shift in consumer preferences towards vehicles with advanced features, cutting-edge technology, and improved safety for the demand for the company's premium SUVs. “75% of XUV700 sales today is for our top variants AX7/AX7L," he said in an emailed response.

No new launches

Tata Motors lacks a significant new launch until mid-2025, when its Sierra EV is expected to debut.

“This year they also saved some share because of their new CNG offerings, but CNG volumes are also disappearing now," a Tata Motors dealer told Mint on condition of anonymity out of business concerns. “With Mahindra's Thar Roxx and MG's Windsor production picking up pace next year, Tata will need to tap into a strategy to bring in incremental volumes. It needs a new model to bring in excitement after the brand's popularity picked in the phase just after Covid-19."

Tata Motors' fleet sales, accounting for 20% of its total EV sales, also stalled because of disruptions in EV policies of states like Delhi.

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Mahindra & Mahindra, on the other hand, has capitalized on its dominance in the SUV category. Its market share climbed from just over 10% in January to 13.14% in November, reflecting steady gains even as Tata faltered. Mahindra plans to further bolster its lineup with battery electric vehicle deliveries slated for 2025.

The SUV segment has seen grown strong which is currently at about 65% of the passenger vehicle market from about 30% 5-6 years ago, Gollagunta said in his response. Mahindra is optimistic about sustaining the momentum due to a strong product pipeline, including nine new ICE SUVs and seven EVs planned by 2030, he said. These include the XUV 3XO and the Thar ROXX.

Moreover, Gollagunta, said “our product line-up is fresh in terms of age of the product, with most of the products launched in the last 3-4 years".

Ageing ICE lineup

Tata Motors, however, is also grappling with an ageing ICE lineup. Its A-segment models, introduced nearly a decade ago, haven’t seen major updates, allowing Mahindra, Hyundai Motor India, Kia India and Maruti Suzuki India Ltd. to dominate the market.

With Nexon EV sales plateauing and the Curvv yet to gain traction, Tata’s prospects hinge on its upcoming launches but will run into competition from its rivals that also plan new models next year.

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Tata Motors' volumes were driven by Nexon and Punch taking the mantle. “While the Punch is continuing to do well, the Nexon after the refresh hasn't done as well," an automotive industry analyst told Mint on condition of anonymity. “Moreover, (Mahindra’s) XUV700 volumes have gone up from 6,000 units to 9,000 volumes a month after their price intervention, but the Safari and Harrier didn't respond much to Tata's price intervention," the analyst said, referring to price cuts.

“I don't see it reversing in the next 6-8 months fully unless the first-time buyer in the hatch and compact segment comes back," he said.